A Gruff Exterior for an Elegant Issue

New Jersey won its long battle for sports betting Monday when the U.S. Supreme Court threw out a federal ban that has lasted for more than a quarter century.

"The legalization of sports gambling requires an important policy choice, but the choice is not ours to make," Justice Samuel Alito, a New Jersey native, said in the Opinion of the Court. "Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own."

State officials have sought since 2011 to legalize sports betting, seeing it as a way to improve the fortunes of Atlantic City, which had seen several casinos close, as well as the state's struggling race tracks.

On the back of this news, gaming technology plays IGT and SGMS shot higher. IGT has earnings on May 22nd, while SGMS has earnings out of the way. I view SGMS as worth of being aggressively stalked on the long side into any pauses or dips now. PENN, as well as BYD CZR PNK, are a few other casino plays which shot higher off this news.

Beyond stocks, as an aside, the gruff exterior of New Jersey sports betting (which I am sure conjured up images of smoke-filled racetracks and sports books filled with shady characters) masked what the essence of this case truly was and why it made its way all the way up the Supreme Court: Federalism.

Federalism, meaning the constitutional concept of the federal versus state government dynamic at play in our republic, is the essence of our country, on some level (checks and balances, avoiding a monarchy, etc.. As Justice Alito noted, this is the sort of issue best left to the individual states' to decide rather than a sweeping federal government So while you may have trouble finding gambling action (of the legal kind, not the back-room old school Doyle Brunson poker games) in Texas, you will now find all sorts of action in New Jersey.

Overall, I suspect the technology angle of this legal development could be most profitable. As such, SGMS comes into focus, again, into any pauses or pullbacks going forward.

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“chessNwine” has been a popular trader and financial blogger since 2009. His work has appeared in The Wall Street Journal Online Edition, Yahoo Finance, TheStreet.com, Josh Brown’s The Reformed Broker blog, AbnormalReturns.com, Barry Ritholtz’s The Big Picture blog, and the “Suggested” stream on Stocktwits.com.